Week 21: Villain – The Banks

by George_East on May 25, 2015

This week’s Villains of the Week are the banks fined record amounts in the US for FX fixing

With the honourable exception of the good people of Iceland we collectively learned not a single thing from the 2008/2009 financial crisis. As the election last week showed the British people swallowed the lie that that crisis had been caused by over-spending of the last Labour government rather than the reckless and in some cases downright criminal behavior of the banks. Seven years later we are back to obscene bonuses, reckless trading and industry pressures to deregulate financial markets.

Last week we were reminded again about the institutional levels of dishonesty of the major banks as the US (and UK) regulators imposed fines of $5.7Bn on six banks including Barclays and RBS for rigging the FX markets. And lets be clear these are not offences that all date from before the financial crisis. Not a bit of it. The charges relate to a period up to 2013. In the case of RBS the criminal activity continued for 5 years while it has been majority owned by the taxpayer.

As the US Attorney General, Loretta Lynch, said this is ‘breathtaking flagrancy’ in the behavior of the banks. They literally did not give a fuck. Any notion that this is about a few bad apples has long been dispelled, the whole edifice of the banking system and its participants is rotten to its core. As this and the prior case of LIBOR fixing has shown the banks exist as a cartel operating against the interest of their customers.

Of course although the size of the fines are huge they dwarf compared to the bonus pools of the banks. The banks have no incentive not to continue to fix markets, rip off their customers and indulge in reckless speculation. Seven years since they came within a day of bringing the entire international financial system crashing down and despite almost endless revelations , we still are in the absurd position that (again) Iceland excepted not a single banker is in prison.